Canada’s retail batch payment system is made up of the Automated Clearing Settlement System (ACSS) and United States Bulk Exchange application (USBE) - a dual currency clearing and settlement system through which the vast majority of payments (both paper-based and electronic; drawn on CDN or U.S. dollar accounts at financial institutions domiciled in Canada) are cleared. Members connect directly or indirectly to these systems securely via the Canadian Payments Association Services Network (CSN).

ACSS and USBE supports 99 per cent of the daily transaction volume and 13 percent of the daily transaction value cleared by all our systems.

The volumes and values of payment items that are exchanged between participants are entered into the ACSS and USBE systems, which calculates the net balances across all participants.

Our rules and standards detail how the exchange, clearing and settlement of retail batch payments must occur.

Specific participant financial institutions, referred to as direct clearers, participate directly in the ACSS. These participants handle the clearing and settlement of payments for their own customers, as well as for customers that maintain accounts at the other financial institutions, known as indirect clearers. Direct clearers must maintain settlement accounts at the Bank of Canada. Settlement of the previous day’s net balances occurs during the morning of each business day, where settlement account balances are extinguished via payments to and from the Bank of Canada.

System upgrades

In August 2020, Payments Canada amended By-law No. 3 - Payment Items and the Automated Clearing Settlement System. This amendment removed the 0.5 per cent volume requirement for direct participation in the retail payment system. In addition, Payments Canada also amended ACSS Rule D1 - Direct Clearer/Group Clearer Requirements. The amendments to this by-law and rule allow for Payments Canada member financial institutions to apply for direct clearer status, which means a member financial institution would have direct access to Payments Canada’s system and not need to rely on another financial institution to clear and settle their transactions.

In June 2022, Peoples Trust Company (PTC) became the first new Direct Clearer on the ACSS in the system’s history. Watch Grant McKenzie, CEO of PTC, discuss the process.

Clearing and settlement across the retail batch payment system

The retail batch payment system clears paper-based and electronic payments.

* Canadian dollar only.

Cheque clearing

When a cheque is deposited at a financial institution’s branch, it goes to its regional data centre, usually that same evening. It will then be cleared and sent to the data centre for the institution of the cheque issuer.

At the end of each day, each direct clearer enters its total number and value of cheques that it must deliver to each other direct clearer into the retail batch payment system. To optimize the flow of cheques, several cheque exchanges are scheduled each evening at six regional exchange points: Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver.

For cheques deposited digitally, and image is captured using a remote deposit capture service such as mobile phone application provided by a financial institution. 

Typically, cheques are cleared the same day they are deposited. However, cheques that are deposited late in the business day, or that can’t be processed by automated equipment, will often be processed the next day. Cheques deposited on a Saturday will not be cleared until the following Monday evening.

In most cases, the "pay/no pay" decision must be made by the next business day. If the cheque is not honoured, it is returned to the branch that initially accepted the deposit.

Electronic payments clearing

All processes for the exchange and clearing of electronic payments occur electronically without the exchange of physical payments.

Direct clearers sort and categorize electronic payments by stream and by the destination clearer. Each direct clearer enters the total volume and value of transactions for which it is owed funds into the retail batch payment system. These figures are combined with the totals for cheques and other paper-based payment items to determine the net balances due to and from each direct clearer to effect settlement on the books of the Bank of Canada the following morning. USBE settlement is effected through correspondent banks in New York.

Electronic payment streams include:

• Automated Funds Transfer debits (pre-authorized debits)
• Automated Funds Transfer credits (mainly direct deposits)
• Point-of-Sale transactions

For more detail about the procedures and schedules that apply to the various streams of electronic payments, refer to the Retail batch payment system rules.

System closure schedule